U.S. v. Bizzell
| Decision Date | 29 November 1993 |
| Parties | NOTICE: Although citation of unpublished opinions remains unfavored, unpublished opinions may now be cited if the opinion has persuasive value on a material issue, and a copy is attached to the citing document or, if cited in oral argument, copies are furnished to the Court and all parties. See General Order of |
| Court | U.S. Court of Appeals — Tenth Circuit |
Before EBEL, GODBOLD, * and KELLY, Circuit Judges.
The defendants-appellants, Charles Kent Bizzell ["Kent"] and John Bizzell ["John"], were convicted for violations of 18 U.S.C. § 1010, which prohibits the making of false statements to the Department of Housing and Urban Development ["HUD"]. Their convictions arose from an alleged scheme to help Hiram Stanley Sasser, II ["Sasser"] obtain HUD-insured loans without meeting certain HUD requirements. They allege several errors on appeal, including the insufficiency of the evidence, the impropriety of the district judge's comments at trial, the failure to excuse a juror for cause, the failure to exclude evidence in violation of the Confrontation Clause, and the amount of the district court's order of restitution against Kent. We affirm except that we remand for a determination whether the court's order of the loss attributable to Kent was attached to the presentence report as required by Rule 32(c)(3)(D).
HUD administers the Federal Housing Administration's ["FHA"] single-family home-mortgage insurance program. I R. 183. When HUD insures a mortgage, it essentially promises the lender that HUD will pay the unpaid balance of the loan in the event of default. I R. 31-32, 39. Under the FHA program, HUD will insure a mortgage on a home purchased as an investment--such as a rental property--for up to eighty-five percent of the cost of acquiring it. 1 The borrower is required to make a down payment or "equity investment"; that is, the buyer must pay the remaining fifteen percent from his or her own funds. I R. 44-45. The seller may not pay the buyer's downpayment. See I.R. 44. At issue here is whether the sellers, Kent and John, paid the buyer's downpayments and then misrepresented that fact in forms submitted to HUD.
HUD-insured loans offer borrowers the advantage of unrestricted assumability and lower interest rates than would otherwise be available. I R. 39. That is, although the original buyer must qualify for the HUD-insured loan, subsequent buyers of the property may assume the loan without meeting creditworthiness requirements. I.R. 39-40. The defendants' expert witness stated that property is easier to sell when it has a HUD-insured mortgage because the field of potential buyers is expanded to include those who could not ordinarily qualify for a mortgage because they are not creditworthy. III R. 402.
During the mid-eighties, when the real estate transactions at issue in this case took place, the Oklahoma City real estate market was depressed. I R. 14. Kent was a realtor and the sole owner of Bizzell Realty in Midwest City. Both Kent and John built houses in the Midwest City area. III R. 349, 350. Some of the houses that Kent and John built remained unsold in the depressed market, although Kent and John still carried hefty loans on the properties. I R. 67-68. In early 1986, Sasser, a loan officer at Talman Home Mortgage Corporation ["Talman"], arranged to buy two single-family homes from Kent and five from John, which they had built and on which they still carried notes. See I.R. 67-68; Aple.Br. 5. The purchases were to be financed through Talman with HUD-insured loans. I R. 26-28. John and Kent were convicted based upon misrepresentations they allegedly made in settlement statements submitted to HUD in connection with Sasser's attempt to obtain HUD insurance. 2 The settlement statements, which were supposed to record the settlement of accounts that occurred at the closing of the sales, were signed by Sasser and the Bizzells and indicated that Sasser had paid fifteen percent of the purchase price and acquisition costs of each of the seven properties from his own funds, with the other eighty-five percent coming from HUD-insured mortgages. I R. 35, 53-54, 68. 3 But evidence introduced at trial suggested that the Bizzells had illegally paid Sasser's downpayment. The Bizzells paid for the cashier's checks that were brought to the closing and that were ultimately used to pay Sasser's downpayment and closing costs. VI R. 329-39; I R. 65-66; II R. 176; II R. 214.
Kent and John eventually admitted to a HUD auditor investigating the transactions that they had, in fact, paid Sasser's earnest money deposit and other acquisition costs. III R. 314. However, the Bizzells contended that their verification was not false, as they had arranged with Sasser to pay him real estate commissions in the amount of his downpayments and settlement costs. III R. 314. They had therefore given the cashiers checks to Sasser in payment of a real estate commission for the sale of the properties, and Sasser had then signed the checks back over to the Bizzells for the downpayment and closing costs for the properties. II R. 230-31. Yet none of the documents submitted to HUD indicated that a real estate commission had been paid to Sasser, even though Sasser listed other settlement charges on the settlement statement and even though there was a space on the settlement form that expressly provided for the recording of commissions. 4 I R. 59, 60-61, 72; II R. 174, 234-35, 280. K.B. Br. Tab H Ex. II at 2; 280 at 2; II R. 230, III R. 180. Nor was the existence of the alleged trade-out agreement revealed to HUD auditors until some time into HUD's investigation. III R. 304-13.
As a result of the seven transactions between the Bizzells and Sasser, $369,888 in HUD-insured loans were created, and the Bizzells were relieved of $343,684 in debt that they were carrying on the unsold houses that they had built. 5 I R. 67-68.
In February 1987, HUD began auditing Talman and the HUD-insured loans it had originated. III R. 300. HUD auditor Sharon Shackelford Howell interviewed Kent several times concerning his sale of properties to Sasser. During the first three conversations she had with Kent, Howell testified that he did not tell her that he had credited Sasser with a real estate commission; in fact, in the third conversation he told her that he had never paid Sasser any real estate fees. III R. 309-11. Both Kent and John told her that Sasser had not paid any earnest money deposits. III R. 311, 312. Kent and John later told her that, in fact, Sasser had acted as a licensed broker and that in return, John and Kent paid the earnest money deposit shown on the sale contracts and the buyer's costs due at closing as shown on the settlement statement. HUD determined that if the payments were real estate commissions, they would be about seventeen percent. III R. 313.
On February 22, 1990, a grand jury in the Western District of Oklahoma charged Kent, John, and Sasser with conspiracy to defraud the United States in violation of 18 U.S.C. 271, K.B. Br. Tab A, (Count 1); charged Sasser and Kent with two counts of making false statements to HUD on their settlement statements in violation of 18 U.S.C. § 1010, K.B. Br. Tab A, (Counts 10, 11); charged Sasser and John with five counts of making false statements on their settlement statements in violation of § 1010, K.B. Br. Tab A, (Counts 12-16); and charged Kent and John with two counts each of making false statements to a HUD auditor in violation of 18 U.S.C. § 1001, K.B. Br. Tab A, (Counts 17-20). 6
After the first jury trial, the district court granted the Bizzells a mistrial because the jury was unable to come to a verdict as to them, although Sasser was convicted of various offenses. After the second jury trial, Kent was found guilty on two counts of making false statements to HUD in violation of § 1010, and John was found guilty on five counts of the same offense. K.B. Br. Tab B; J.B. Br. Tab B. A mistrial was again declared on the conspiracy count against Kent and John because the jury was unable to reach a verdict on that count. K.B. Br. Tab B; J.B. Br. Tab B. The district court sentenced Kent on December 20, 1991, to concurrent eighteen-month terms of imprisonment on each count of conviction, ordered him to perform 200 hours of community service, and ordered him to pay restitution for that part of the victim's total loss that would later be determined to be attributable to him. K.B. Br. Tab B. On the same day, the court sentenced John to concurrent terms of one year and one day's imprisonment on each of his five counts of conviction, ordered him to perform 200 hours of community service, and ordered him to pay restitution for that portion of Talman's loss attributable to him as later determined. J.B. Br. Tab B. On April 21, 1992, the district court ordered Kent to pay $57,147.59 in restitution. K.B. Br. Tab C.
On appeal, Kent and John assert that (1) there was insufficient evidence to support their convictions, (2) the district court erred in refusing to excuse a juror for cause, (3) the district court violated their right to confrontation by admitting evidence of statements made by Sasser, and (4) the district court erred in submitting a supplemental Allen instruction to the jury after it announced that it was deadlocked. In addition, Kent contends that the district court erred in making prejudicial comments to him in front of the jury and in ordering him to pay $57,147.59 in restitution. We will address each contention in turn.
Kent and John first...
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